What price a life? 

Yusuf Hamied’s offer to supply cheap Aids drugs is an embarrassment to the major pharmaceutical companies. 

There has never been a worse time to be a titan of the pharmaceutical industry. Emboldened by massive publicity for campaigns against Huntingdon Life Sciences, animal rights protesters are turning to bigger fish, such as GlaxoSmithKline (GSK). Oxfam recently launched an astonishingly outspoken campaign condemning drug companies — and the Western governments that support them — for not supplying cheap medicines to the world’s poorest nations. 

Their public image is now getting another pummelling. In a gripping legal test case, 40 companies are taking the South African Government to the High Court in Pretoria for introducing legislation that would allow the import of cheap copycat drugs to combat Aids. The companies, which include GSK, claim that the legislation rides roughshod over their patent rights. 

The action has provoked outrage. Oxfam has denounced it as “corporate bullying”. Médecins sans Frontières (MSF), the medical charity, has called it an “act of corporate inhumanity”. It is not difficult to view the legal case as morally difficult — the companies are, effectively, fighting to protect their right to charge premium prices for their lifesaving elixirs, even in the world’s most disease-ridden corners. 

The apparent greed of the drugs industry is also thrown into sharp relief by the gesture of an Indian businessman. Last month Dr Yusuf Hamied, the head of Cipla, a major Indian pharmaceutical company, offered to supply Aids drugs at bargain prices to MSF, and to the governments of India and African nations. 

Nevirapine, one such therapy, helps to prevent the transmission of HIV from a pregnant mother to her unborn child. Its maker, Boehringer Ingelheim, charges about $8 per pill; Hamied is offering it free. 

Hamied, who saw a close friend die of Aids, is offering MSF a proven triple-cocktail therapy at $350 per patient per year; it would normally cost about $10,000 in America and a similar sum in Britain. His gesture, which has provoked both anger and admiration, and the shenanigans in Pretoria, have put the drugs industry in the public eye. The big companies and their fat profit margins, legally protected by 20-year monopolies on patented formulations, have begun to raise eyebrows. 

The ten largest drug companies in America enjoyed collective sales of about $179 billion last year, creaming off $121 billion of that as gross profit. Those margins are unmatched by virtually any other industry and are simply too high to get away with, according to Professor Uwe Reinhardt, a medical economist at Princeton University in New Jersey. “They (the drug companies) have had almost too good a ride,” Reinhardt observes. “They have had the run of the market for too long and they are in for something of a shock.” 

The fundamental problem for drug companies is that they make money by charging a price to tackle human misery. That is not too controversial for big companies operating in the West, where insurers and governments tend to foot the health bill. When a company develops a medicine, it is granted a 20-year patent — a monopoly on producing it. It is like devising a recipe and being the only company allowed to bake the cake. Those patents are protected under laws policed by the World Trade Organisation — except that countries reserve the right to override the laws in cases of national emergency. That will be the basis of South Africa’s defence against the collective might of the drug industry. The case is expected to return to the Pretoria High Court next month.

 As a result of the WTO laws, companies can charge what they like. Phil Thomson, a spokesman for GSK, defends the large profits by saying that research and development swallows much of it and, without that money, no new medicines would be developed. The profits are extraordinary — in 1999, before it merged with SmithKlineBeecham to become GSK, GlaxoWellcome turned over £8.4 billion. Of that, £1.3 billion went into research, while £2.8 billion represented operating profit. 

After the 20-year patent has expired, any drug company — subject to safety controls and approval from regulatory authorities — can use the same recipe. These drugs are called generics and, because anyone can use the recipe, they tend to be cheaper. 

The problem with Aids is that the medicines, developed over the past two decades, are still under patent. The prices of the drugs are too high for African nations, so human misery has lingered in a way that would have been unthinkable in Western Europe. The UN estimates that the march of Aids across sub-Saharan Africa has already claimed 17 million lives and threatens 25 million more. It is not hard to see how this situation can be elevated to a scandal — a continent is dying while waiting for patents to expire. 

Belatedly, United Nations agencies have urged companies to slash their prices for poor nations. As a result, Glaxo-Wellcome (now GSK), Merck, Boehringer Ingelheim, F. Hoffmann-La Roche and Bristol-Myers Squibb agreed to provide Aids drugs to Senegal, Rwanda and Uganda for about $1,000-$2,000 per patient per year. 

Kenya rejected the offer as “cynical” because the discounted prices are still unaffordable. Thomson says GSK’s offer to about 30 governments is now $700 and that the company has been offering a 90 per cent discount since 1997. Last week, the Government of Ivory Coast took up the offer. 

Thomson cannot say, however, how many people in developing nations have been treated at that price, nor how many doses GSK will make available. He admits that, even at these discounts, the therapies are beyond the reach of many countries. “There is a recognition within the industry that more needs to be done,” he concedes. 

So the Indian company Cipla has stepped in. It can afford to sell cheap knock-offs because it has never spent a rupee on developing Aids drugs, holds no patents on them, and doesn’t pay a licensing fee to the companies that did develop them. 

India revoked its patent laws in the early Seventies and allows the copying of blockbuster drugs protected by international law in other countries. Hamied is offering MSF the chance to distribute the triple cocktail in pilot projects across Africa for just $350 per patient per year. The charity has accepted. Cipla also plans to sell it to poor governments, including India’s, for about $600. Thomson questions whether Cipla’s offer is “sustainable”, but refuses to comment further on its pricing policy. 

Cipla is the second largest supplier of medicines to pharmacies in India; Forbes magazine estimates Hamied to be worth $550 million. Hamied says that he was moved to make his offer because of the Gujarat earthquake — this was an unforeseen tragedy, he says, while the rising death toll due to Aids is a foreseeable, preventable one. Hamied explains: “Until 1997, if someone in India was diagnosed HIV-positive, it was a death sentence. Today it is not a death sentence. It can be treated like any other chronic disease, and people can have a good quality of life. We (Cipla) want to do a service to society in our own little way.” 

But surely he can understand why other companies might get upset at him swanning on to the international stage, copying their products, which have cost millions to develop, then positioning himself as an anti-Aids crusader? “There’s room for the multinationals at their price, and there’s room for us at our price,” says Hamied. “There’s room for 100 Ciplas and ten Glaxos. Why are we fighting each other?” Reinhardt believes there could be a middle ground between Cipla and its aggrieved rivals, such as GSK. Cipla should sell the Aids drugs at cost — he says it would not be right for Cipla to profit from a drug that it has spent no money on developing. Western drug companies, meanwhile, should offer their drugs much more cheaply to developing nations than to those in the West. Laws should be in place prohibiting foreign governments from selling the cheap drugs on, so that those discounted medicines don’t find their way back into pricier markets. “I think it’s perfectly ethical to charge more in wealthier countries,” says Reinhardt. “The fact is that Western companies have made their money from Western Aids patients. They don’t need any more profits.”